198 U.S.

236
25 S.Ct. 637
49 L.Ed. 1031

BOARD OF TRADE OF THE CITY OF CHICAGO,

Petitioner,
v.
CHRISTIE GRAIN & STOCK COMPANY and C. C. Christie.
NO 224. L. A. KINSEY COMPANY et al., Petitioners, v.
BOARD OF TRADE OF THE CITY OF CHICAGO. NO 280.
Nos. 224, 280.
Argued April 20, 24, 25, 1905.
Decided May 8, 1905.

Mr. Henry S. Robbins for petitioner in No. 224, and respondent in No.
280.
[Argument of Counsel from pages 237-240 intentionally omitted]
Messrs. James H. Harkless, W. H. Rossington, Charles S. Crysler,
Charles Blood Smith, Clifford Histed, J. S. West, and Chester H. Krum for
respondents in No. 224.
Messrs. Lioyd Charles Whitman, E. D. Crumpacker, Jacob J. Kern, John
A. Brown, Charles D. Fullen, and Peter Crumpacker for petitioner in No.
280.
[Argument of Counsel from pages 241-244 intentionally omitted]
Messrs. Julien T. Davies, Abram I. Elkus, and Garrard Glenn by special
leave for Edwin Hawley and Frank R. Ray.
Mr. Justice Holmes delivered the opinion of the court:

These are two bills in equity brought by the Chicago board of trade to enjoin
the principal defendants from using and distributing the continuous quotations
of prices on sales of grain and provisions for future delivery, which are

collected by the plaintiff, and which cannot be obtained by the defendants

except through a known breach of the confidential terms on which the plaintiff
communicates them. It is sufficient for the purposes of decision to state the
facts, without reciting the pleadings in detail. The plaintiff was incorporated by
special charter of the state of Illinois on February 18, 1859. The charter
incorporated an existing board of trade, and there seems to be no reason to
doubt, as indeed is alleged by the Christie Grain & Stock Company, that it then
managed its chamber of commerce substantially as it has since. The main
feature of its management is that it maintains an exchange hall for the exclusive
use of its members, which now has become one of the great grain and provision
markets of the world. Three separated portions of this hall are known
respectively as the wheat pit, the corn pit, and the provision pit. In these pits the
members make sales and purchases exclusively for future delivery, the
members dealing always as principals between themselves, and being bound
practically, at least, as principals to those who employ them when they are not
acting on their own behalf.
2

The quotation of the prices continuously offered and accepted in these pits
during business hours are collected at the plaintiff's expense, and handed to the
telegraph companies, which have their instruments close at hand, and by the
latter are sent to a great number of offices. The telegraph companies all receive
the quotations under a contract not to furnish them to any bucket shop or place
where they are used as a basis for bets or illegal contracts. To that end they
agree to submit applications to the board of trade for investigation, and to
require the applicant, if satisfactory, to make a contract with the telegraph
company and the board of trade, which, if observed, confines the information
within a circle of persons all contracting with the board of trade. The principal
defendants get and publish these quotations in some way not disclosed. It is
said not to be proved that they get them wrongfully, even if the plaintiff has the
rights which it claims. But as the defendants do not get them from the telegraph
companies authorized to distribute them, have declined to sign the abovementioned contracts, and deny the plaintiff's rights altogether, it is a reasonable
conclusion that they get, and intend to get, their knowledge in a way which is
wrongful unless their contention is maintained.

It is alleged in the bills that the principal defendants keep bucket shops, and the
plaintiff's proof on that point fails, except so far as their refusal to sign the
usual contracts may lead to an inference, but, if the plaintiff has the rights
which it alleges, the failure is immaterial. The main defense is this: It is said
that the plaintiff itself keeps the greatest of bucket shops, in the sense of an
Illinois statute of June 6, 1887, that is, places wherein is permitted the
pretended buying and selling of grain, etc., without any intention of receiving

and paying for the property so bought, or of delivering the property so sold. On
this ground it is contended that if, under other circumstances, there could be
property in the quotations, which hardly is admitted, the subject-matter is so
infected with the plaintiff's own illegal conduct that it is caput lupinum, and
may be carried off by any one at will.
4

It appears that in not less than three quarters of the transactions in the grain pit
there is no physical handing over of any grain, but that there is a settlement,
either by the direct method, so called, or by what is known as ringing up. The
direct method consists simply in setting off contracts to buy wheat of a certain
amount at a certain time, against contracts to sell a like amount at the same
time, and paying the difference of price in cash, at the end of the business day.
The ring settlement is reached by a comparison of books among the clerks of
the members buying and selling in the pit, and picking out a series of
transactions which begins and ends with dealings which can be set against each
other by eliminating those betweenas, if A has sold to B 5,000 bushels of
May wheat, and B has sold the same amount to C, and C to D, and D to A.
Substituting D for B by novation, A's sale can be set against his purchase, on
simply paying the difference in price. The circuit court of appeals for the eighth
circuit took the defendant's view of these facts, and ordered the bill to be
dismissed. 61 C. C. A. 11, 125 Fed. 161. The circuit court of appeals for the
seventh circuit declined to follow this decision, and granted an injunction, as
prayed. 64 C. C. A. 669, 130 Fed. 507. Thereupon writs of certiorari were
granted by this court, and both cases are here.

As has appeared, the plaintiff's chamber of commerce is, in the first place, a
great market, where, through its eighteen hundred members, is transacted a
large part of the grain and provision business of the world. Of course, in a
modern market, contracts are not confined to sales for immediate delivery.
People will endeavor to forecast the future, and to make agreements according
to their prophecy. Speculation of this kind by competent men is the selfadjustment of society to the probable. Its value in well known as a means of
avoiding or mitigating catastrophes, equalizing prices, and providing for
periods of want. It is true that the success of the strong induces imitation by the
weak, and that incompetent persons bring themselves to ruin by undertaking to
speculate in their turn. But legislatures and courts generally have recognized
that the natural evolutions of a complex society are to be touched only with a
very cautious hand, and that such coarse attempts at a remedy for the waste
incident to every social function as a simple prohibition and laws to stop its
being are harmful and vain. This court has upheld sales of stock for future
delivery and the substitution of parties, provided for by the rules of the Chicago
stock exchange. Clews v. Jamieson, 182 U. S. 461, 45 L. ed. 1183, 21 Sup. Ct.

Rep. 845.
6

When the Chicago board of trade was incorporated, we cannot doubt that it was
expected to afford a market for future as well as present sales, with the
necessary incidents of such a market, and while the state of Illinois allows that
charter to stand, we cannot believe that the pits, merely as places where future
sales are made, are forbidden by the law. But again, the contracts made in the
pits are contracts between the members. We must suppose that from the
beginning, as now, if a member had a contract with another member to buy a
certain amount of wheat at a certain time, and another to sell the same amount
at the same time, it would be deemed unnecessary to exchange warehouse
receipts. We must suppose that then as now, a settlement would be made by the
payment of differences, after the analogy of a clearing house. This naturally
would take place no less that the contracts were made in good faith, for actual
delivery, since the result of actual delivery would be to leave the parties just
where they were before. Set-off has all the effects of delivery. The ring
settlement is simply a more complex case of the same kind. These settlements
would be frequent, as the number of persons buying and selling was
comparatively small.

The fact that contracts are satisfied in this way by set-off and the payment of
differences detracts in no degree from the good faith of the parties, and if the
parties know when they make such contracts that they are very likely to have a
chance to satisfy them in that way, and intend to make use of it, that fact is
perfectly consistent with a serious besiness purpose, and an intent that the
contract shall mean what it says. There is no doubt, from the rules of the board
of trade or the evidence, that the contracts made between the members are
intended and supposed to be binding in manner and form as they are made.
There is no doubt that a large part of those contracts is made for serious
business purposes. Hedging, for instance, as it is called, is a means by which
collectors and exporters of grain or other products, and manufacturers who
make contracts in advance for the sale of their goods, secure themselves against
the fluctuations of the market by counter contracts for the purchase or sale, as
the case may be, of an equal quantity of the product, or of the material of
manufacture. It is none the less a serious business contract for a legitimate and
useful purpose that it may be offset before the time of delivery in case delivery
should not be needed or desired.

Purchases made with the understanding that the contract will be settled by
paying the difference between the contract and the market price at a certain
time (Embrey v. Jemison, 131 U. S. 336, 33 L. ed. 172, 9 Sup. Ct. Rep. 776;
Weare Commission Co. v. People, 209 Ill. 528, 70 N. E. 1076), stand on

different ground from purchases made merely with the expectation that they
will be satisfied by set-off. If the latter might fall within the statute of Illinois,
we would not be the first to decide that they did when the object was selfprotection in business, and not merely a speculation entered into for its own
sake. It seems to us an extraordinary and unlikely proposition that the dealings
which give its character to the great market for future sales in this country are
to be regarded as mere wagers or as 'pretended' buying or selling, without any
intention of receiving and paying for the property bought, or of delivering the
property sold, within the meaning of the Illinois act. Such a view seems to us
hardly consistent with the admitted fact that the quotations of prices from the
market are of the utmost importance to the business world, and not least to the
farmers; so important, indeed, that it is argued here and has been held in Illinois
that the quotations are clothed with a public use. It seems to us hardly
consistent with the obvious purposes of the plaintiff's charter, or indeed with
the words of the statute invoked. The sales in the pits art not pretended, but, as
we have said, are meant and supposed to be binding. A set-off is, in legal
effect, a delivery. We speak only of the contracts made in the pits, because in
them the members are principals. The subsidiary rights of their employers
where the members buy as brokers we think it unnecessary to discuss.
9

In the view which we take, the proportion of the dealings in the pit which are
settled in this way throws no light on the question of the proportion of serious
dealings for legitimate business purposes to those which fairly can be classed as
wagers, or pretended contracts. No more does the fact that the contracts thus
disposed of call for many times the total receipts of grain in Chicago. The fact
that they can be and are set off sufficiently explains the possibility, which is no
more wonderful than the enormous disproportion between the currency of the
country and contracts for the payment of money, many of which in like manner
are set off in clearing houses without any one dreaming that they are not paid,
and for the rest of whch the same money suffices in succession, the less being
needed the more rapid the circulation is.

10

But suppose that the board of trade does keep a place where pretended and
unlawful buying and selling are permitted, which, as yet, the supreme court of
Illinois, we believe, has been careful not to intimate, it does not follow that it
should not be protected in this suit. The question whether it should be involves
several elements which we shall take up in turn.

11

In the first place, apart from special objections, the plaintiff's collection of
quotations is entitled to the protection of the law. It stands like a trade secret.
The plaintiff has the right to keep the work which it has done, or paid for doing,
to itself. The fact that others might do similar work, if they might, does not

authorize them to steal the plaintiff's. Compare Bleistein v. Donaldson

Lithographing Co. 188 U. S. 239, 249, 250, 47 L. ed. 460, 462, 23 Sup. Ct.
Rep. 298. The plaintiff does not lose its rights by communicating the result to
persons, even if many, in confidential relations to itself, under a contract not to
make it public, and strangers to the trust will be restrained from getting at the
knowledge by inducing a breach of trust, and using knowledge obtained by
such a breach. Exchange Teleg. Co. v. Gregory [1896] 1 Q. B. 147; F. W.
Dodge Co. v. Construction Information Co. 183 Mass. 62, 60 L. R. A. 810, 97
Am. St. Rep. 412, 66 N. E. 204; Board of Trade v. C. B. Thomson Commission
Co. 103 Fed. 902; Board of Trade v. Haddon-Krull Co. 109 Fed. 705; National
Teleg. News Co. v. Western Union Teleg. Co. 60 L. R. A. 805, 56 C. C. A. 198,
119 Fed. 294; Illinois Commission Co. v. Cleveland Teleg. Co. 56 C. C. A.
205, 119 Fed. 301.
12

The publications insisted on in some of the arguments were publications in

breach of contract, and do not affect the plaintiff's rights. Time is of the essence
in matters like this, and it fairly may be said that, if the contracts with the
plaintiff are kept, the information will not become public property until the
plaintiff has gained its reward. A priority of a few minutes probably is enough.

13

If, then, the plaintiff's collection of information is otherwise entitled to

protection, it does not cease to be so, even if it is information concerning illegal
acts. The statistics of crime are property to the same extent as any other
statistice, even if collected by a criminal who furnishes some of the data. The
supreme court of Illinois has recognized, in the fullest terms, the value and
necessity of the knowledge which the plaintiffs control. It must have known,
even if it did not have the evidence before it, as to which we cannot tell from
the report, what was the course of dealing on the exchange. Yet it was so far
from suggesting that the plaintiff's work was unmeritorious that it held it
clothed with a public use. New York & C. Grain & Stock Exch. v. Board of
Trade, 127 Ill. 153, 2 L. R. A. 411, 19 N. E. 855.

14

The defendants lay hold of the declaration in the case last cited, and say, with
doubtful consistency, that this information is of such importance that it is
clothed with a public use, and that, therefore, they are entitled to get and use it.
In the case referred to it was held that the plaintiff, which had been receiving
the continuous quotations, was entitled still to receive them on paying for them,
and submitting to all reasonable requirements in relation to the same. Perhaps
the right of the plaintiff would have been more obvious if it had demanded an
opportunity, on reasonable conditions, of collecting the information for itself,
especially if the legislature had seen fit to provide by law for its doing so. But it
is not necessary to consider whether we are bound by that decision, or, if not,

should follow it, since in these cases the claim is not qualified by submission to
reasonable rules or an offer of payment. It is a claim of independent rights and a
denial that the plaintiff has any right at all. The supreme court of Illinois gave
no sanction to such a claim as that.
15

Finally it is urged that the contracts with the telegraph companies violate the
act of July 2, 1890, chap. 647 (26 Stat. at L. 209, U. S. Comp. Stat. 1901, p.
3200). The short answer is that the contracts are not relied on as a cause of
action. They are stated simply to show that the only communication of its
collected facts by the plaintiff is a confidential communication, and does not
destroy the plaintiff's rights. But so far as these contracts limit the
communication of what the plaintiff might have refrained from communicating
to anyone, there is no monopoly or attempt at monopoly, and no contract in
restraint of trade, either under the statute or at common law. E. Bement & Sons
v. National Harrow Co. 186 U. S. 70, 46 L. ed. 1058, 22 Sup. Ct. Rep. 747;
Fowle v. Park, 131 U. S. 88, 33 L. ed. 67, 9 Sup. Ct. Rep. 658; Elliman v.
Carrington [1901] 2 Ch. 275. It is argued that the true purpose is to exclude all
persons who do not deal through members of the board of trade. Whether there
is anything in the law to hinder these regulations geing made with that intent
we shall not consider, as we do not regard such a general scheme as shown by
the contracts or proved. A scheme to exclude bucket shops is shown and
proclaimed, no doubt, and the defendants, with their contention as to the
plaintiff, call this an attempt at a monopoly in bucket shops. But it is simply a
restraint on the acquisition for illegal purposes of the fruits of the plaintiff's
work. Central Stock & Grain Exch. v. Board of Trade, 196 Ill. 396, 63 N. E.
740. We are of opinion that the plaintiff is entitled to an injunction, as prayed.

16

Decree in No. 224 reversed.

17

Decree in No. 280 affirmed.

18

Mr. Justice Harlan, Mr. Justice Brewer, and Mr. Justice Day dissent.